Are Municipal Bonds a Good Investment?

MUNI bonds are considered a good investment as they provide Tax Exempt income, low credit risk, flexibility and marketability

Tax Exemption: Interest from MUNI bonds are exempt from federal income taxes and for the most part are exempt from state income taxes from which the bond was issued. This makes MUNI bond investment particularly attractive to those in higher tax brackets. Compared to a taxable investment, the yield of MUNI bonds is often much greater.

Low Credit Risk: MUNI bonds are considered a fairly conservative investment as their interest and principal payments are relatively very secure. While there might be market fluctuations of the bond price during the holding period, the issuer of the bond is required to pay back in full the purchase price of the bond upon maturity.

Flexibility: MUNI bonds can come in all shapes and sizes. Ranging from just a few months to several decades, MUNI bonds provide heightened flexibility with regard to maturation dates.

Marketibility: MUNI bonds are traded actively through networks of broker and banks nationwide. Selling bonds before the maturation date could yield a higher return than the original purchase price.